We asked the question last fall “What did Chase know and when did they know it?” (AppraiserNews.com October 7, 2013) regarding the faulty appraiser selection process of the defunct AMC Evaluation Solutions and Chase, their largest client. It perplexed us that Chase could either not be aware or not care about the method under which Evaluation Solutions procured appraisers for Chase appraisal assignments: through a “broadcast” email to a fairly large number of appraisers with the assignment awarded to the appraiser offering the lowest fee quote and quickest “turnaround” time. A link to our past article is found here: Appraiser News Archive
In this October newsletter, we also discussed another AMC known for a similar “broadcast” method of awarding appraisal assignments. Chase was also the client of this AMC, a company that cannot be compared with Evaluation Solutions in any way except for their unacceptable method of procuring appraisers for assignments.
Appraisers are all too familiar with this scenario: An email arrives which offers a fee that is far below “customary and usual” for an appraisal involving a complex property. When contacted by an appraiser who explains that the property is complex and deserving of a higher fee, the staff of this AMC typically pleads ignorance and states that they are unable to make a determination of property complexity. In many cases, an appraiser can make such a determination within several minutes.
This AMC is one of the top AMCs as to innovative technology, data gathering and reporting. Recently, they announced their selection by Freddie Mac as a technology provider for data validation services. Remember: this is the same company that solicited appraisers through a “broadcast” method and claimed not to be able to easily make a determination of property complexity.
In our October newsletter, we noted that federal regulators would be “revisiting the issue of ‘customary and reasonable fees’ by the end of the year”. Last newsletter, we discussed the proposed rule by the six federal agencies which included the implementation of minimum requirements for state registration and supervision of AMCs including the use of licensed or certified appraisers only. The proposed rule also places obligations on AMCs to “ensure the usage of competent, independent appraisers”.
It would be our guess that because of this proposed rule and other pressures that AMCs have either ended or are in the process of ending this “broadcast” method of procuring appraisers. It is also our hope that the same pressures (including liability factors) will end the utilization of BPOs (broker price opinions) which we referred to in the October newsletter as “dirty little appraisal substitutes”.
Several questions: Did Freddie Mac understand the manner in which appraisers were selected by the AMC with which they are partnering? Does the appraiser selection process utilized by this AMC matter to Freddie Mac or is the apparently superior technology offered by the AMC the only relevant issue? As we have discussed in recent newsletters, “Big Data” offers many tools to appraisers and regulators. We welcome the efforts by Freddie Mac to try to improve appraisal review through advanced analytics.
At the same time, it is disappointing for appraisers to see Freddie Mac partnering with AMCs that have utilized these “broadcast” methods of procuring appraisers. After reading Michael Lewis’ new book “Flash Boys: A Wall Street Revolt” it led me to ponder the question of how little the S.E.C. seemed to know or care about the impact of high-frequency trading on the financial markets. It also led me to think about how both AMCs and high-frequency traders profited by acting as middlemen in the “shadows”, receiving little scrutiny. Recently, the S.E.C. chairwoman and the New York attorney general have both announced investigations into high-frequency trading. Also recently, the six federal agencies have announced proposed new rules for AMCs.
Final questions: Why did it take so long for federal regulators to concern themselves with questionable AMC practices? Also, will they now take appropriate corrective measures as well as ending BPOs?
Finally: What did Chase know and when did they know it? (And when will Michael Lewis write a book on AMCs, the big banks and the appraisal industry?)
A link to our last newsletter, which also includes a link to the proposed rule by the six federal agencies, is found here: "Waiting For the Fallout"
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Periodically we find it necessary to explain our position regarding AMCs. In a nutshell: while we find the current role of AMCs to be extremely troublesome, this does not mean that there are not good AMCs. It has been our experience that there are a number of professional, respectable AMCs, many of whom employ good, professional appraisers. Some of these AMCs even have Chase as a client.
This reminds me of the saying that even a broken clock has the correct time once (or twice) a day…
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Bryan Caffrey of Arizona based Arivs Appraisal Management writes: “Thank you for your news letter. As a small local AMC I was obviously interested in your ‘Waiting For The Fallout’ piece. However, after reading the article I am not sure that I agree with some of your thoughts. Outside of a very few states that do not currently require AMCs to be registered, how are these rules going to affect them. All AMCs already use licensed and certified appraisers. They are already licensed in most states and these states have stringent requirements already. Being licensed in a few more will hardly be a problem or change their practices. All this will do is increase their operating cost which in turn will be paid by appraisers. Furthermore, the trend is obviously towards not using AMCs and doing the management in house. As this trend will not affect the larger AMCs with the ‘wretched business practices’ it will only move the smaller banks back to managing in house, and the closer the system is to home the more abuses will occur this is axiomatic. I know many appraisers will disagree with me but the really bad abuses I see in the system are all from in house management where they keep a small list of appraiser that do not distress their loan officers (as that is where the money is) with ‘low values’. For all the complaining appraisers do about fees under AMCs the struggle to find honest work was far worse. I assume I am missing something which is why I am responding as I am interested in your thoughts”.
Kansas City appraiser Mark Hastert writes:
“It’s that niggling uneasiness in the back of our minds. We all know it’s there but no one will say it so let me be the first…..we’re doomed. The appraisal profession is in a death spiral and I don’t see a way or the will, to stop it. There are just too many factors pulling us down into the abyss…
What’s the term for a non-adaptive species? Extinct. So the world will move on without us. Someday I’ll tell my grandchildren about the quaint job I used to have dragging my clip board and tape measure through the rose bushes, nipped at by dogs that, according to the homeowner, don’t bite, falling on my keister in the snow. We’ll laugh and then move on to another story about the olden days.
Finally, we are weak. We are the runts of the real estate litter. There are about 104,000 +/- licensed and certified real estate appraisers in the US. There are more than 1,000,000 NAR members and more than 2,000 member companies in the Mortgage Bankers Association. NAR, the MBA, et al have deep deep pockets to lobby for their interests. We simply cannot compete…
Is it too late? Probably. I don’t see anything on the horizon that would alter our trajectory. I hope I’m wrong because I like my job but odds aren’t good”.
Appraiser Help has Released its 2014 Directory of AMC’s and National Appraisal Companies. Click the link above to learn more and to download your copy today!
To help appraisers evaluate how AMCs will work for their appraisal practices, we have compiled this expanded directory of AMCs and National Appraisal Companies, listing complete, contact information and other details for each listing.
If you’re looking to maintain or expand your mortgage appraisal practice, our Directory of Appraisal Management and National Appraisal Companies is a great place to start. Order it today for $69.99 and download it immediately!
Please visit our website now to make your purchase securely or contact us at (877) 434-2825 for more information on this comprehensive directory!
AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.
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Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends reported that mortgage interest rates had declined in their most recent surveys.
On April 17th, Freddie Mac reported that 30-year fixed-rate mortgages fell to 4.27% from 4.34% the previous week. They also noted that last year at this time the 30-year rate was at 3.41%.
Frank Nothaft, vice president and chief economist of Freddie Mac, noted that: "Mortgage rates continued to ease this week as housing starts rose 2.8 percent in March but not as much as expected. Also, permits fell 2.4 percent in March to a seasonally adjusted annual rate of 990,000, which followed a slight downward revision of 4,000 permits in February."
On that same day, Freddie Mac released their U.S. Economic and Housing Market Outlook for April, a link to which is found here: Freddie Mac: Demand Drivers
The Mortgage Bankers Association (MBA) reported on April 16th (for the week ending April 11th) that 30-year rates with conforming loan balances ($417,500 or less) dropped to 4.47% from 4.56%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) also fell, to 4.39% from 4.49%. Rates for FHA backed mortgages declined to 4.14% from 4.19%. Mortgage applications were up by 4.3% from the prior week’s figure. The share of refinance applications as a percentage of all applications increased from 51% to 52%.
On April 18th, HSH Market Trends reported that 30-year mortgage rates fell to 4.38% from 4.43% the previous week. Rates for FHA-backed mortgages also dropped, from 4.10% to 4.07%.
Last Friday, HSH also released their Two-Month Mortgage Rate Forecast, a link to which is found here: The HSH Two-Month Mortgage Rate Forecast
Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac
Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association
Additional information from HSH can be found by going to: HSH.Com
We would first like to congratulate our most recent winner: New York appraiser Timothy Faso of Fort Neck Appraisal. Tim was the first to answer correctly that Duke University professor Dan Ariely said "Big data is like teenage s_x: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it…."; Alan Kay said "The best way to predict the future is to invent it”; and Yogi Berra quipped "Baseball is ninety percent mental and the other half is physical."
Today’s Questions:
1. Who said: "Don’t reinvent the wheel. Most stuff worth writing has been written already. Just link to it.”
a) Matt Cutts
b) Arianna Huffington
c) Sheryl Sandberg
d) Ernest Hemingway
e) None of the above
2. Who said: "In the Spring I have counted 136 different kinds of weather in 24 hours.”
a) Al Roker
b) Mark Twain
c) Storm Fields
d) Al Gore
e) None of the above
3. Who said: "Spring is nature’s way of saying ‘Let’s party!’"
a) John Belushi
b) George Bush
c) Robin Williams
d) Lindsay Lohan
e) None of the above
The first person to respond with the correct answers wins a choice of one of the following:
One Free Regular Listing on AppraiserHelp.com
A Free Copy of the Newly Released 2014 Directory of Appraisal Management Companies (Available to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)
We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!
We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at www.appraisernews.com
Regards,
Bill Collins, Appraiser Help Inc.
Appraiser Help Real Estate Appraiser Directory
Commercial Express from Narrative1
Newly Released 2014 Directory of AMCs and National Appraisal Companies
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Tax Grievance and Tax Appeal Appraiser Directory
In our last newsletter, we discussed the just released proposed rule by the six federal agencies (FHFA, CFPB, FDIC, OCC, NCUA and Federal Reserve Board of Governors) which “would implement minimum requirements for state registration and supervision of appraisal management companies (AMCs)”. This rule includes some requirements regarding state registration of AMCs, utilization of state-certified or licensed appraisers only for federally related transactions and obligations that AMCs need to ensure the usage of competent, independent appraisers.
While this rule gives AMCs a considerable time period to comply, it is safe to say that many will calculate the cost of compliance to be so burdensome that they will be forced to close, sell or merge with another AMC. The prevailing thought is that smaller AMCs will be under the greatest pressure but it is our thought that some of the biggest AMCs (appraisers know who they are) will also face great difficulties changing the wretched business practices that have defined their operations for many years. These practices have been profitable up to now for AMCs (at the expense of appraisers) but will no longer meet the approval of regulators and pose huge liability risks for said AMCs.
Since the proposed rule was released two weeks ago, several AMCs have already announced changes. Last Wednesday, Stewart Lender Services announced that they were acquiring DataQuick Lending Solution’s “…robust suite of collateral valuation products including appraisal, broker price opinion, and hybrid valuation products”. The announcement noted that these “valuation products” would be a complement to the company’s already existing home equity and first mortgage products. It was also announced last week that Equity National was closing its Valuations Division. Changes such as this are just the beginning.
For those appraisers who missed the announcement of the proposed rule in our last newsletter, here is a link to the joint release (which includes the full name of the five agencies identified by acronyms above):
Agency Issues Proposed Rule on Minimum Requirements for Appraisal Management Companies
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Sunday’s New York Times Op-Ed pages carried an article by Gary Marcus and Ernest Davis with the above title. Some of the problems that the authors describe:
~While Big Data is good at detecting correlations, it is deficient in telling us which are meaningful.
~Tools based on Big Data can be “gamed” and many times the results are not as convincing as they might first appear.
~Big Data can suffer from an “echo-chamber” effect where initial web based errors are magnified (what we used to call “garbage in, garbage out”).
~A risk of “too many correlations” can result in “bogus correlations that appear statistically significant”. With inadequate oversight, meaningless correlations can be erroneously given credibility.
~Big Data can work well with common situations but has difficulties with less common ones (this may be the biggest problem appraisers have with the Big Data applications they have experienced).
The last problem the Times’ authors cite: the hype. They conclude by saying: “Big data is here to stay, as it should be. But let’s be realistic: It’s an important resource for anyone analyzing data, not a silver bullet”.
A link to the entire article is found here:
Eight (No, Nine!) Problems With Big Data
AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.
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A Michigan appraiser summed up in one sentence the (lengthy) comments that we received from appraisers around the country regarding our last (lengthy) newsletter:
“Looks like Big Data is taking over, more risk for appraisers…”
Many appraisers have asked us to withhold their names out of fears that comments critical of for example AMCs might result in a loss of business. An Alabama appraiser writes:
“Thanks for replying and taking interest in my email. As much as I would love to put my name on this email, unfortunately, I am not at a point where I could survive losing any one of my clients. If any one of my few remaining clients happen to see it and takes the comments, context or intentions the wrong way it could/would be very detrimental to my business. And I have more than just myself to think about. At this point, without a stronger united appraiser front and representation/voice, I fell certain I would be left standing alone. Yes I know it sounds cowardly. And trust me, it feels that way too! But again I have my family to think about and not just me. Wow! Something else just occurred to me as I was writing. In all my years of appraising I have never felt scared to voice my concerns, even directly to my clients. Sad!
However you are more than welcome to use any or all it for a news letter but I just can’t take the chance of putting my name on it. Hope you can somewhat understand.”
South Carolina appraiser Susan Traywick writes:
“…my comments are meant for your editorial team, not your readers so much. I am not overly optimistic about the appraisal profession but my professional situation is not nearly as bad as you consistently make things out to be, at least in my part of the world. I have worked fulltime residentially for 28 yrs in a small community and have always received a full fee for my work. My clients are our local banks as well as individuals and attorneys and less than 10% of my work is for AMCs, but the ones I do work for pay a full fee. I have never compromised my integrity or my profession by providing the desired number and that part of our profession has actually improved tremendously in the past 5 yrs. NOBODY pressures me to make a contract work, period, nor do I hear any other appraisers complaining about that.
I just wish you could say something positive in your newsletter – it really has become a kind of ‘The sky is falling” mentality’.
Appraiser Help has Released its 2014 Directory of AMC’s and National Appraisal Companies. Click the link above to learn more and to download your copy today!
Last Thursday, CoreLogic released their National Foreclosure Report for February. CoreLogic reported annual drops of 35% in foreclosure inventory from February of last year and a 23% in shadow inventory from January 2013. Anand Nallathambi, CoreLogic’s president and CEO noted that “The stock of seriously delinquent homes and the foreclosure rate are back to levels last seen in the final quarter of 2008”.
Getting even bigger: While Stewart Lending Services was acquiring Data Quick’s “valuation products”, CoreLogic acquired Data Quick’s information division along with completing the acquisition of Marshall & Swift/Boeckh.
AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.
ClickForms From Bradford Technologies
To help appraisers evaluate how AMCs will work for their appraisal practices, we have compiled this expanded directory of AMCs and National Appraisal Companies, listing complete, contact information and other details for each listing.
If you’re looking to maintain or expand your mortgage appraisal practice, our Directory of Appraisal Management and National Appraisal Companies is a great place to start. Order it today for $69.99 and download it immediately!
Please visit our website now to make your purchase securely or contact us at (877) 434-2825 for more information on this comprehensive directory!
Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends reported that mortgage interest rates had increased slightly in their most recent surveys.
On April 3rd, Freddie Mac reported that 30-year fixed-rate mortgages rose to 4.41% from 4.40% the previous week. They also noted that last year at this time the 30-year rate was at 3.54%.
One week earlier, Freddie Mac rolled out another housing market indicator which they call the “Multi-Indicator Market Index” (nicknamed MiMi). Notwithstanding the strained attempt at a memorable nickname, this index will likely be useful to appraisers with its focus on local markets. A link to the news release announcing this index along with the inaugural report is found here:
Freddie Mac’s New Multi-Indicator Market Index Measures Stability of Metro, State and National Housing Markets
The Mortgage Bankers Association (MBA) reported on April 2nd (for the week ending March 28th) that 30-year rates with conforming loan balances ($417,500 or less) were unchanged from the previous week at 4.56%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) rose to 4.46% from the previous week’s rate of 4.45%. Rates for FHA backed mortgages also increased, to 4.21% from 4.16% the previous week. Mortgage applications were down by 1.2% from the prior week’s figure. The share of refinance applications as a percentage of all applications dropped for the eighth straight week to 53%.
On April 4th, HSH Market Trends reported that 30-year mortgage rates rose to 4.49% from 4.48% the previous week. Rates for FHA-backed mortgages also increased, from 4.14% to 4.16%.
Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac
Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association
Additional information from HSH can be found by going to: HSH.Com
We would first like to congratulate our most recent winner: Chris Moore of Appraisal and More in Fairfield, California. Appraisal and More covers the north-central California counties of Alameda, Contra Costa, Napa, Sacramento, Sonoma and Solano. Chris was the first to answer correctly that William James was the author of the quote “Act as if what you do makes a difference. It does”; Oscar Wilde was the author of the quote “A writer is someone who has taught his mind to misbehave”; and Benjamin Franklin is responsible for “We are all born ignorant, but one must work hard to remain stupid." Today’s Questions:
1. Who said: "Big data is like teenage [you know]: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it…."
a) Ruth Westheimer
b) Alfred Kinsey
c) Dan Ariely, Duke University Professor
d) Masters and Johnson
e) None of the above
2. Who said: "The best way to predict the future is to invent it."
a) Steve Jobs
b) Albert Einstein
c) Alan Kay
d) Jeff Bradford
e) None of the above
3. Who said: "Baseball is ninety percent mental and the other half is physical."
a) Derek Jeter
b) Casey Stengel
c) Yogi Berra
d) Howard Cosell
e) None of the above
The first person to respond with the correct answers wins a choice of one of the following:
One Free Regular Listing on AppraiserHelp.com
A Free Copy of the Newly Released 2014 Directory of Appraisal Management Companies (Available to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)
We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!
We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at www.appraisernews.com
Regards,
Bill Collins, Appraiser Help Inc.
Appraiser Help Real Estate Appraiser Directory
Commercial Express from Narrative1
Newly Released 2014 Directory of AMCs and National Appraisal Companies
ClickForms from Bradford Technology
Tax Grievance and Tax Appeal Appraiser Directory
